Indian shares close at near three-month high

BENGALURU, April 4 (Reuters) - Indian shares rose on Monday to close at a near three-month high, buoyed by a surge in India's largest private lender HDFC Bank and mortgage lender Housing Development Finance Corp after the companies said they were merging in a $40 billion deal.

The NSE Nifty 50 index (.NSEI) closed 2.2% higher at 18,053.40, and the S&P BSE Sensex (.BSESN) rose 2.25% to 60,611.74.

HDFC Ltd (HDFC.NS) gained 9.3%, hitting its highest since late November, while HDFC Bank (HDBK.NS) rose about 10% to a level not seen since mid-October.

The Nifty bank index (.NSEBANK) rose 4% and the finance index (.NIFTYFIN) surged 4.6%.

The market movement is largely due to the "unexpected announcement" of the merger, said Saurabh Jain, assistant vice president at SMC Securities.

"This is a very positive news in the sense the foreign institutional investors holding will increase after the merger," Jain said.

Both HDFC and HDFC Bank were major laggards last year, gaining 1.1% and 3%, respectively, compared with a 13.5% rise in the Nifty bank index.